Pricing Forecast: CDW Tactics to Continue

Analysts say CDW's aggressive pricing won't change as a result of its acquisition by a private equity firm.

The chatter has been rampant: Will CDWs pending acquisition by a private equity firm put an end to the companys recent very aggressive pricing?
Analysts have answered with a resounding no.
"Some VARs have been speculating that this could take the price pressure off," said Christina Richmond, research manager for hardware channels and alliances at IDC. "But its not necessarily true that they will not be as cost competitive. If anything they will have more flexibility there because they wont be under scrutiny by Wall Street."

Forrester Research analyst Michael Speyer agreed with that assessment.

"I dont believe CDW will start raising prices," he said. "The price competition in the channel will still be very intense."
But Speyer and others agree that CDW will begin to put an even greater push behind its services business.
"The channel will start to feel more heat going forward in terms of competition on services," he said. "You will start seeing this 12 to 24 months out."

Click here to read more about the pending deal and the future of CDW.
Pricing will be one component of that increased competition in services, Speyer said.
"The more interesting issue is how will this affect what the channel will look like 12 to 24 months out," he said. Speyer believes that this CDW deal may be the precursor to a number of companies setting out to create "Super VARs," or VARs with a national footprint and very strong product and services businesses.
Such Super VARs may be assembled by private equity firms that buy several VARs and combine them. Or they may self-assemble as VARs merge with each other in order to better compete, he said.

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com